A Fee Disclosure Statement (FDS) is a yearly statement from an adviser giving personal advice to trade clients. It provides facts about the previous 12 months of an ongoing fee arrangement. Fee recipients must give clients an FDS on an annual basis, which discloses information about the previous 12 months of their ongoing fee arrangement.
FDS is a statement is writing that information about last 12 month. Victor provided Tim and Nancy with their Fees disclosure statement on 1 August 2019 which is right decision. When he submit previous year information than its will helpful for them to know about accurate information of service. The information include in FDS in below:
The normal rule is that advisers must provide existing clients with an FDS within a 30 day period beginning on the disclosure day. For every year thereafter an FDS must be provided to the client on or before the end of a 30 day period beginning on the next disclosure day. Victor can include Ongoing Services you were entitled to receive and Ongoing Services you received information in FDS form.
The important information is FDS is not an invoice. No payment required for FDS. This FDS comprises the fees that you have paid in relation to your client services agreement.
Under the law (s962G and s962S) clients must be provided with an FDS within 60 days of the ‘disclosure day’. Discloser date means ongoing service arrangements commenced OR the date of the last FDS provided to the client.
Failure to comply the FDS results is the termination of the ongoing fee arrangement. However, civil penalty may be sought if ongoing fees are charged after the arrangement has terminated. These duties are not appropriate if the ongoing fee procedure relates to instalment payments of the original information fee or if it does not relate to “a period of more than 12 months.
Victor specified in the FDS that all fees were paid in Australian dollars because the margin to be charge smaller than Australian bank. So the exchange rate is more favorable which is very cheaper to buy currency from abroad.
The exchange rate values is one currency to another currency. Exchange rate is matter every countries economy Australian exchange rate is not different like this. Its influence international trade and business. Changes in exchange rate is effect Australian economy in two ways. Like as:
The best way to take Aus dollar like Visa card, master card and Amex card. The availability, facility can influence victor stated in the FDS that all fees were paid in Australian dollars. They were 1.8% of Tim and Nancy portfolio which is actually indicating good sign. Actually when you transection in currency than you must follow the currency market values. Otherwise you are falling suffering as well as.
The Replacement Explanatory Memorandum notes at para 1.13 that an ongoing fee paid by a third party to an AFS licensee or its representatives will generally not constitute an ongoing fee for the purposes of s962A(1)(c) and 962A(2)(c), unless the fee is paid with the clear consent of, or at the direction of, the client.
This law clearly identify that Victor statement is not illegal. The commission generally need to be disclosed in the FDS, on the basis that they are paid under a commercial arrangement between a product issuer or platform operator and a fee recipient. Therefore, fee receipt is consider whether any commission arrangement were entered into with the clear consent of.
Another ways we know that it’s very difficult for a fee receipt to determine the commission and advice fees, Victor consider that disclose all of the fees in the FDS. If commission are not released in the FDS, the fee receipt should be careful to safeguard that the wording of the FDS does not misinform clients by implying or suggesting that the fees disclosed are the only payments received by the fee recipient.
Tim and Nancy want to do comprehensive meeting every six month but victor is unable to attend because is spending most of the time Welstars Sydney office. If he attend this meeting than it’s really helpful for Tim and Nancy. The comprehensive review is helpful for them to know about SMSF benefit, strength, opportunity, threat and weakness etc. It will be a great opportunity from them.
Benefit of Comprehensive meeting
Victor is spending more time in Welstar’s Sydney office because here was shortage of Advisor. So, he was working there but he need to do comprehensive meeting with Tim and Nancy. The comprehensive review meeting is very organized like as:
Comprehensive review of product
It also making time to time chart for the helpfulness.
1. Financial advisers will be required to disclose the total fees that will be charged over the next 12-month period. So, ASIC proposed that s962H(1)(a)(i) should be repealed and rather than having ‘backwards-looking’ FDS that sets out the services the client received, or could have received in the previous 12 months, the FDS should include information on the fees to be charged and services to be provided in the coming year, as well as information about the previous year.
The FDS comprise information about last 12 month period about:
The recommendation 2.1 provide protection against the future fees for no service conduct. The law should be conduct
The royal commission also recommended that FOFA client’s renewals obligation notice should be removed. But the present time laws has been changed like as: The SIS Act sets out general fees rules that apply to all superannuation trustees. The general fees has been restricted for the type of financial product.
The another royal commission 3.3 motivations for wanting advice fees deducted from superannuation, Deduction of any advice fee (other than for intra-fund advice) from superannuation accounts other than MySuper accounts should be prohibited unless the requirements about annual renewal, prior written identification of service and provision of the client’s express written authority set out in Recommendation 2.1 in connection with ongoing fee arrangements are met.
A backward looking document is plainly for the fee disclosure statement. The service of client was entitled to receive. Neither the description of ongoing fee arrangement in section 962A(2) nor any other provision of the Corporations Act seems to require an adviser to identify prospectively with any degree of specificity what services the client will be entitled to receive, and what services will be providing.
The reason FDS is knowing all information about service and others cost which is very helpful for client. The FDS can maintain chart where we gather all information about service here. Factually, financial advisers would have outspokenly opposed increased disclosure duties. It is perhaps an indication of the mounting professionalism of the advice industry that many Licensees have selected to accept more rigorous consumer protection mechanisms that, in addition to better engaging clients, will no longer necessitate them to provide Fee Disclosure Statements.
The context of amendment existing law declare under that arrangement a fee is to be salaried during a period of more than 12 months.
2. Financial advisers will be required to seek renewal of ongoing fee arrangements by clients annually. So, ASIC proposed to repeal s 962L(1) which require financial advisers to renew Ongoing Fee Arrangements (OFA) every two years and exempt any OFA entered into prior to 1 July 2013 from renewal requirements.
The law should be amended to provide that OFA. Which is
For recommendation 2.1 the purposes of the draft legislation s962(2)(c), a signed renewal notice contract from a client (as obligated at s962K) should be a valid authorization form that can be accepted by product providers.
I can show some renewal notice which is very important for this task:
Finally, in this report we are finding lots of relation data and also maintain purchasing report. We also find individual service and knowing about the present situate. They maintain government rules to do business. The risk and benefit can show up as well as. The royal commission and also discuss about recommendation.
Research Team, assured S. (2019, September 9). Five questions (and answers) about FDS'. Retrieved May 14, 2020, from https://www.assuredsupport.com.au/articles/2019/9/8/five-questions-and-answers-about-fds
Frydenberg,J.(2020).Retrieved 14 May 2020, from https://treasury.gov.au/sites/default/files/2020-01/c2020-48919m-explanatory-memorandum-rec2_1.pdf
(2020). Retrieved 14 May 2020, from https://download.asic.gov.au/media/5360405/rep636-published-28-november-2019.pdf
ASIC reports on compliance with financial advice fee disclosure obligations - AdviserVoice. (2020). Retrieved 14 May 2020, from https://www.adviservoice.com.au/2019/12/asic-reports-on-compliance-with-financial-advice-fee-disclosure-obligations/
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